CMHC says housing starts will be lower this year, pick up in 2014

The Canadian Mortgage and Housing Corp. is forecasting provincial home resales of 73,000 units this year. The 10-year average is 86,500 units.

Photographed by:Richard Buchan, THE CANADIAN PRESS

Immigration and better economic prospects in B.C. will bring a boost in existing home sales and new home construction in 2013, compared to last year, but both will remain below their 10-year averages, according to Canada Mortgage and Housing Corp.

For 2014, CMHC calls for stronger economic and employment growth, leading to higher levels of resale activity and construction as well as modest home price growth in B.C.

The forecast for resales is 73,000 units in 2013 and 79,500 in 2014, again below the 10-year average of 86,500 units.

“While employment and population growth would suggest a higher level of resale activity than projected, a number of factors are dampening sales. These factors include a reduced inventory of homes for sale as some sellers choose to let their listings expire rather than accept lower prices, and buyers take a wait-and-see attitude as existing home prices moderate in the Vancouver and Victoria housing markets,” CMHC said in its forecast, which calls for a slight dip in the average MLS price to $511,200 in 2013, and then a subsequent rise to $524,000 in 2014.

Single-family housing starts in B.C. are forecast at 9,100 units in 2013 and 9,500 units in 2014, well below the 10-year average of 11,700 units. Multi-family starts are forecast at 19,700 units in 2013 and 21,000 in 2014, CMHC said. The 2013 numbers include several large-scale projects in the Vancouver area which already have building permits and site preparation underway, CMHC said.

Across the country, CMHC says total annual housing starts are expected to be lower in 2013 compared with last year because moderate economic and employment growth in the second half of 2012 have led to more modest housing demand this year.

CMHC says employment and economic growth will likely gain momentum later this year and in 2014, pushing housing starts slightly higher next year.

“CMHC expects housing construction activity will trend lower in the first half of 2013, before gaining more momentum by the end of the year as economic and employment growth remain supportive of the Canadian housing market,” Mathieu Laberge, deputy chief economist for CMHC, said in a statement.

“In 2014, improving economic conditions may be partially offset by a slight moderation in the number of first-time homebuyers, and potential small and steady increases in mortgage interest rates,” Laberge said.